losing faith., page-23

I've also gone big on ADY, subscribing to the idea of thoroughly researching one or two stocks and then, if they tick all the boxes, going for broke (well hopefully not broke, but you know what I mean). I'm about 83% in ADY now and most of the rest is in AGS with one or two crumbs elsewhere. I dipped my toe in with a small stake in Jan 2005 at 7.8 cents, watched them go to 24 cents soon after, then all the way back down again. Some more research at that point made me realise just what this thing could potentially turn into, so around this time last year I threw in practically everything but the shirt on my back and have held on tight ever since (average just over 10c).

ADY is a fantastic story that has a long way to run; all going well, ADY should be hitting the equivalent of $1.50 or even $2 (in terms of value per share pre de-merger) next year. If I was to spread my savings more widely it'd be safer of course, but the chances of me being able to give the middle finger to my day job would be many years further out -- the more one diversifies, the greater the chances of their returns being just average, albeit more safely so. So it's a matter of balancing risk against reward, and doing as much reading up on a company as possible before putting any money into it to help lower the risk side (acknowledging, of course, that risk will never be zero no matter what).

No matter which way I have looked at ADY, however, it just keeps coming up trumps -- it is one of those fortunate companies that is hitting its straps at just the right time in terms of market demand for *all* of its products. The Li project at Rincon in particular is going to roar -- think demand for hybrid cars for starters, and the multitude of other uses for Li batteries too, not to mention non-battery uses for Li. Even hydrogen-powered cars that are planned for production will mostly carry Li-ion batteries. Then there's the potash, a by-product of the Li production process (ADY has millions of tonnes of the stuff, and it's in increasing demand), and of course the Fe story in Chile, the resource for which is getting bigger all the time. We also have a very astute and energetic fellow at the helm who is only too willing to communicate directly with shareholders.

Next year will be very big for ADY, and not just because of the demerger that's about to take place. This year has been none too shabby either -- from 9.5 cents to 46.5 cents in less than 11 months. I will sell down only when I believe the price to have reached a level that can't be justified by actual or future revenues. This might happen next year, I don't know. But it's definitely not now, not yet.